Cultured mouse fibroblasts which are transformed by RNA viruses, a DNA virus or a chemical agent, all secrete a 39,000 Mr-phosphoglycoprotein (major excreted protein, MEP) in large amounts. Nontransformed murine fibroblasts secrete MEP after treatment with tumor promoters such as TPA or growth factors such as PDGF. The purified protein contains mannose 6-phosphate, the lysosomal recognition marker. It is processed intracellularly in both transformed and nontransformed cells to give two specific lower molecular weight forms, the lowest of which has a predominantly lysosomal localization. The secreted form of MEP is the precursor to a lower molecular weight novel thiol protease (cathepsin) with a pH optimum of 3-5 capable of hydrolyzing a wide variety of proteins including the extracellular matrix proteins collagen, fibronectin and laminin. The specificity of peptide bond cleavage has been determined using oxidized insulin B chain. Secreted MEP can bind to the mannose 6-phosphate receptor of many cells and be endocytosed and processed intracelluarly. Transformation, TPA and PDGF stimulate MEP synthesis by increasing levels of MEP specific mRNA as measured using an MEP specific cDNA probe. The mechanism of the increase in MEP mRNA levels is increased transcription as measured in nuclear run-off experiments. We have cloned a functional MEP gene from the mouse and have identified the 5' flanking region presumed to contain the MEP promoter. We are studying this system as a model of regulation of lysosomal protease synthesis, processing and secretion as it is affected by transformation and agents which mimic the transformed state, such as tumor promoters and growth factors.